December 2005 Share Issue

Published on Tuesday 1st November, 2005 by Celtic Trust

During the period of discussion of this issue ie up to the deadline for applications on 20 December 2005 this page will be reserved for publication of any information and further clarification on the shares issue which the Celtic Trust is able to obtain. We are currently actively seeking such advice from independent sources with the relevant expertise. A list of some of our initial queries are detailed below together with some answers. We have noted below some of the relevant dates which are associated with the share issue. Latest time for receipt of completed proxy forms: 10am 22 November 2005 Extraordinary General Meeting: 10am 23 November 2005 Latest time for receipt of Application forms and Subscription Forms and payment in full under the Share Offers: 3pm 20 December 2005


EGM Report 23 November 2005

Our assessment of the share issue in terms of the long-term benefit to Celtic is different from one that a 'normal' shareholder in a company might have. The vast majority of Celtic fans did not buy shares to make a profit but to contribute to the well-being of the club and to have a stake in the club to go along with their emotional investment. However, as an organisation which seeks to represent the interests of the supporter/small shareholder, it is our duty to provide whatever clarification we can on this matter in order to assist fans in deciding whether to take up their rights under the issue or to invest in new share. The points which we put to the Board at the EGM were as follows: This share issue is necessary because Celtic PLC have made significant losses for the last six years ie every since Fergus McCann left. We might have broken even this year but for our early exit from Europe. However, we are still in a period where the wage bill is 60% of turnover. Following this issue how soon does the board think we will return to profitability? We were informed by Peter Lawell that the Board plans for us to reach break-even point within a 5-year plan. The move to the AIM does make sense in terms of reducing costs although we note that it involves a lower standard of financial disclosure and we would hope that Celtic PLC would continue to provide the same level of information as in the past. We were informed by both Brian Wilson (acting Chair) and Eric Riley that the company is committed to producing the same level of information for the benefit of shareholders as they had done while listed on the Stock Market. In answer to another question about the associated cost saving, it was suggested that the figure was around £40,000. As regards the Takeover Panel Waiver request. Normally when someone goes over the 30% ownership mark they are required to make an offer for the rest of the shares. This would usually be done at a premium to the existing price. While we are happy for Dermot Desmond not to do this – given our commitment to wider share ownership – we note that this leaves him in a better position to make a bid at a later stage and at a lower price than would otherwise be the case. So our view is that this is a bad move in a financial sense for small shareholders, but given that this is not the reason that most of us hold shares in Celtic, we are prepared to support it. This assessment was not disputed by any of the Board members. It was repeatedly stated that there is no 'hidden agenda' and that an attempt was being made to make the share issue successful while maintaining a wide share ownership. Adoption of CPO Shares: we are pleased that the automatic conversion date in September 2007 is now being removed although again we note that this is just a stay of execution since the conversion can take place at any time after that. We also note that there is an increased protection for the 2001 shareholders in the sense that now they could potentially get 3.9 ordinary shares for every one CPO share. This is, in our view, a very unfortunate development, and makes the 2001 issue an even better deal for those who invested in it – chiefly Mr Desmond and his associates. This assessment was also not disputed by any of the Board members present. In general, this is a bad deal for small shareholders in a financial sense, but in actual fact, most of us did not invest in Celtic for financial reward. The jerseys were sold in 2001 when the value of the existing shareholdings at that time were reduced substantially and they have never recovered. However, we are prepared to support it with reservation because we recognise the need for new capital at this time.


Our View So Far

The advice we have been given is that legally we are not allowed to encourage or discourage people to take part in the share issue. However, we are allowed to say that we intend to buy shares. Our decision to do so is solely to provide extra money to the club and we have some reservations about the way the share issue is structured (as indicated by the points we raised at the EGM which are detailed above).


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